Why railroads love long trains

The 270-car, 38,475-ton coal train Union Pacific recently ran from Nebraska to a Wisconsin power plant is but one extreme example of the railroad’s focus on running longer trains, a fundamental building block of Precision Scheduled Railroading.

Why the focus on long trains at UP and elsewhere? Simple: Moving your tonnage on longer trains is the fastest and easiest way to cut your operating expenses. Reduce train starts and you use fewer crews and fewer locomotives.

To see the financial impact in action, look north of UP headquarters in Omaha – way north – to Canada in winter, when the Canadian railways become a train length laboratory.

Canadian National and Canadian Pacific routinely run trains longer than 12,000 feet across the Prairies and mountains of Western Canada. But when extreme cold hits in the winter, they’re forced to significantly reduce train length.

In other words, they have to move the same amount of tonnage on more trains, which requires more locomotives and more crews. The added expense shows up in their operating ratios for the first quarter, which is when you’ll typically find the coldest weather.

Let’s look at CN this winter, when extreme cold gripped parts of the system for seven weeks. In the fourth quarter, when cold wasn’t much of a factor, CN’s operating ratio was 61.2%. It rose six points, to 67.2%, in a first quarter that was frigid even by Canadian standards.

Not convinced? Go back to another brutally cold winter – 2013-14, which famously brought rail traffic in Chicago to a standstill – and you’ll find the same thing. CN’s operating ratio went from 64.8% in the fourth quarter to 69.6% in the first. It then improved by 10 points, dropping to 59.6% in the second quarter, when warmer weather meant the return of longer trains.

Running shorter trains is not the only increased cost in the winter, of course, and there are other pieces of the O.R. puzzle.

But train length is a major contributing factor behind the higher operating ratios of the Canadian railways in January, February, and March. And the improvement come spring goes to show how much of a difference long trains can make in a railroad’s financial performance.

Which brings us back to UP.

UP has an operating ratio target of 60% for next year and ultimately aims for a 55% O.R.

So with UP focused on maximizing efficiency, productivity, and profitability under PSR, you can see why Omaha is attracted to longer trains. It’s a financial formula that works – and one that new UP Chief Operating Officer Jim Vena knows firsthand from his decades of experience at CN.

UP is building longer trains by blending some unit-train traffic into its manifest network and by combining trains that run between the same pairs of terminals.

Long trains also explain UP’s decision to hit the pause button on its $550 million Brazos Yard project.

Instead of spending money on the new hump yard being built near Hearne, Texas, UP this year will divert the cash to building longer passing sidings and a block-swapping yard on the Sunset Route that links California and Texas.

In one sense, UP is trading investments in dwell (a hump yard) for investments in velocity (longer sidings). But the heart of the matter is reducing train starts on the Sunset Route by running longer trains west of El Paso, Texas.

To make this happen, UP is building a $20 million block-swapping yard at Santa Teresa, N.M., just across the Texas border from El Paso and the site of an intermodal terminal and run-through fueling facility that opened in 2014. The Santa Teresa terminal was built with expansion in mind, and grading for the block-swapping yard was done during initial construction.

Once the yard is in place, westbound intermodal trains from three single-track routes – the Golden State, the Texas & Pacific, and the Sunset – will converge on Santa Teresa, where they will be combined into longer trains bound for destinations in California. The process will work in reverse for eastbound traffic.

UP also is extending sidings in the remaining single-track sections of the Sunset Route – which include three sections in Arizona and two sections in Southern California – to handle longer trains.

Financial considerations aside, the industry-wide trend toward longer trains carries some operational baggage, like scheduling meets where trains are over siding length. Longer trains also take longer to start and stop, and train handling can be an issue. They’re more prone to failures en route and take longer to fix when they encounter problems on the main line. And they also spend more time blocking crossings, raising the ire of a public with little patience and putting railroads in the uncomfortable glare of increased regulatory scrutiny.

But there is no question that as railroads embrace PSR, the financial benefits of long trains outweigh any operational drawbacks. So get ready for UP’s Armour-yellow fleet to be lugging ever-longer trains.

You can reach Bill Stephens at bybillstephens@gmail.com and follow him on Twitter @bybillstephens